MILAN, June 26 (Reuters) - European shares got off to a firm start to the week on Monday as banks rallied after Italy reached a deal on two failed regional banks and consumer bellwether Nestle hit a record high after becoming the next target of activist investor Third Point.
Italy began winding up two failed regional banks on Sunday in a deal that could cost Rome up to 17 billion euros and will leave the lenders' good assets in the hands of Intesa Sanpaolo.
Intesa shares rose 3.6 percent while the euro zone bank index rose 1.2 percent.
Gains in bank stocks helped the pan-European STOXX 600 and the euro zone blue chip indexes rise both 0.7 percent, while UK's FTSE added 0.6 percent.
Nestle led gainers in the STOXX, up 4.1 percent. Activist investor Daniel Loeb unveiled a stake of more than 1 percent on Sunday, urging the group to improve its margins, buy back stock and shed non-core businesses.
Gains in Nestle also gave a lift to sector peers such as Unilever and Diageo sending the European food and beverage index up more than 2 percent and on track for its best day this year.
Stronger oil prices also propped up the energy sector, the year's worst performing this year, with majors such as BP , Total leading the charge.
Underscoring the broadly upbeat mood across markets, safe-haven utilities were the only sector in the red in early trades.
Reporting by Danilo Masoni, Editing by Vikram Subhedar